Israel and Iran Escalating Conflict causing Major Issues for Markets

Tensions in the Middle East are escalating rapidly, with the ongoing Iran-Israel conflict now driving significant volatility across global share markets, currency pairs, and bullion markets. What began as a series of proxy skirmishes has now evolved into a broader regional flashpoint, involving drone and missile exchanges, political posturing, and heightened threats of direct confrontation.

Markets are responding accordingly. Investors are fleeing risk, sending safe-haven assets like gold and silver higher, while equities - particularly in Europe and Asia - have seen sharp swings. Oil prices have also surged in response to concerns over supply disruptions through the Strait of Hormuz, a key shipping channel for global energy exports. The geopolitical instability is injecting fresh fear into already jittery markets, with many fund managers now pricing in prolonged uncertainty for the remainder of the year.

Currency markets are also reacting to the instability, with the US dollar gaining ground against risk-sensitive currencies like the Australian and New Zealand dollars. Defensive positioning is becoming more common as traders factor in the potential for conflict to spill across borders, disrupt supply chains, and weigh further on fragile global growth forecasts.

Meanwhile, data out of the United States points to deepening cracks in the domestic economy. Retail spending declined by 0.9% in the latest report, marking another month of contraction and fueling concerns that consumer sentiment is waning. The pain is most visible among small and mid-sized retailers, already squeezed by rising input costs and cautious consumers.

Analysts expect Australia to follow a similar path, with early indicators showing signs of declining foot traffic and household spending. With cost-of-living pressures mounting and interest rate relief still uncertain, many businesses are bracing for a tough winter trading period.

 
Enjoy today’s charts.

Gold daily chart, with 50MDA

Silver daily chart, with 50MDA

US500, with 50MDA

ASX200, with 50MDA